Pest world 2013 managing people for profit

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PestWorld presentation that I gave in Phoenix AZ. The presentation focuses on how to manage your people to establish a culture of performance and accountability.

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Pest world 2013 managing people for profit

  1. 1. Maximizing Profit Through People Management Donnie Shelton Raleigh, NC donnie.shelton@trianglepest.com @donnieray3
  2. 2. Let’s take some time to focus Turn off or do not disturb…. Don’t be offended! © Triangle Pest Control LLC. All Rights Reserved
  3. 3. The purpose of this presentation is how to increase profits through productivity and efficiency “Any intelligent conversation begins with defining your terms” – my old statistics professor © Triangle Pest Control LLC. All Rights Reserved
  4. 4. Definition of terms What is your definition of winning in business? © Triangle Pest Control LLC. All Rights Reserved
  5. 5. Definition of terms What is winning in business? “Profits and cash are the only true measure of health of your business” -- George Cloutier © Triangle Pest Control LLC. All Rights Reserved
  6. 6. Definition of terms What is winning in business? •  For the purposes of this discussion, winning is •  How much profit does your business generate •  How much cash you have for emergencies •  The sustainability of your profit model © Triangle Pest Control LLC. All Rights Reserved
  7. 7. Definition of terms What do you consider a “healthy” profit (before taxes)? © Triangle Pest Control LLC. All Rights Reserved
  8. 8. Definition of terms What do you consider a “healthy” profit? Regardless of size for the purposes of this discussion >15-20% on the bottom line •  After owner salary •  It is ok to re-invest profit for growth (but you should be able to pull it if needed) © Triangle Pest Control LLC. All Rights Reserved
  9. 9. Definition of terms How is productivity defined for this discussion? - How many people measure this? Care to share? © Triangle Pest Control LLC. All Rights Reserved
  10. 10. Definition of terms How is productivity defined for this discussion? Rev/Stop*/** •  >$100k per stop *Note that large one-time revenue spikes can skew this number. It should be calculated by service line to identify these anomalies **Note that you can also look at revenue per hour © Triangle Pest Control LLC. All Rights Reserved
  11. 11. Some final disclaimers… 1.  This is what has worked for me and my company a.  That does not mean that it will work at yours 2.  This presentation has both opinion* and facts *The facts are well researched. The opinions are well… opinions © Triangle Pest Control LLC. All Rights Reserved
  12. 12. Part I The thought process of how we run operate our business (the theory) © Triangle Pest Control LLC. All Rights Reserved
  13. 13. How many of you know a business owner like this? •  Very frugal •  Dissects the P&L for profit leaks •  Will send a rep packing over $0.30 •  A true price shopper •  Refuses to pay much over minimum wage for technicians •  Has technicians driving around just wasting time © Triangle Pest Control LLC. All Rights Reserved
  14. 14. What is the largest expense on the P&L? © Triangle Pest Control LLC. All Rights Reserved
  15. 15. What is the largest expense on the P&L? Payroll In my example, some business owners have misplaced enthusiasm for making a profit © Triangle Pest Control LLC. All Rights Reserved
  16. 16. Profit comes from productivity What do we really sell customers? -  Operationally speaking? This is not a marketing presentation! © Triangle Pest Control LLC. All Rights Reserved
  17. 17. What do we really sell customers? Time © Triangle Pest Control LLC. All Rights Reserved
  18. 18. Profit comes from productivity What is the point? To win on the bottom line, you have to be really good at managing your expenses Revenue – Expenses = Profit •  Spend your time on the largest expense on the books (not small game) © Triangle Pest Control LLC. All Rights Reserved
  19. 19. Do you see a trend? © Triangle Pest Control LLC. All Rights Reserved
  20. 20. Principle #1: Profit comes from high productivity Profit Your ability to do more with less is directly proportional to your profit (assuming pricing is in line) © Triangle Pest Control LLC. All Rights Reserved
  21. 21. We are going to talk about pirates © Triangle Pest Control LLC. All Rights Reserved
  22. 22. Why are we talking about pirates? This is a logic fallacy Sometimes we have the tendency to confuse causation with correlation… Causation ≠ Correlation** **Interestingly… The number of pirates in the last 8 years have skyrocketed. As such, the planet has been cooling © Triangle Pest Control LLC. All Rights Reserved
  23. 23. Quick question Have you ever came back from a conference with a great idea, implemented it and then a few months later it….. Just….. Died? What’s he looking at? © Triangle Pest Control LLC. All Rights Reserved
  24. 24. Which is more important? Strategy •  Techniques that you use to compete and gain customers •  Are based on multiple factors: market, positioning, etc… •  Change as market conditions change Culture •  How your people work •  How your people interact with your customers •  How your people view you, your customers, and their role in the organization © Triangle Pest Control LLC. All Rights Reserved
  25. 25. Who are these guys? © Triangle Pest Control LLC. All Rights Reserved
  26. 26. Who are these guys? Mark Fields •  Next CEO of Ford •  Responsible for Ford’s turnaround Peter Drucker, PHD •  Medal of freedom •  Professor of business •  Famous Author “Culture eats strategy for breakfast” © Triangle Pest Control LLC. All Rights Reserved
  27. 27. Causation vs. Correlation Where do we get into problems in our business? We tend to assume profit is a result of strategy, but actually it is not quite that simple… •  Strategies are the cause (Correlate) •  Culture will take care of itself (Cause) What it means is that no strategy can be executed without a strong foundational culture I personally think both are important. It is the order that really matters. © Triangle Pest Control LLC. All Rights Reserved
  28. 28. Culture vs. Strategy Think about it. •  You can have the most genius strategy in the world, but if you don’t have the culture you cannot execute •  It is like having a great Broken computer (not an Apple) program but a broken computer. © Triangle Pest Control LLC. All Rights Reserved
  29. 29. Culture eats strategy for breakfast Jack Welch •  Arguably one of the best CEOs ever •  30 yrs in the job •  GE’s value rose 4000% on his watch How he operated •  20-70-10 vital curve •  80% of his time was on culture (not strategy) •  Public hangings for bad culture •  Biggest mistake looking at numbers and not culture fit for acquisitions © Triangle Pest Control LLC. All Rights Reserved
  30. 30. Principle #2: High productivity is a first a function of culture and then strategy Profit High Productivity © Triangle Pest Control LLC. All Rights Reserved
  31. 31. How many have read this book? Jim Collins •  Massive research project of “great” businesses •  Determine principles makes companies “great” •  Outperform the market by multiples © Triangle Pest Control LLC. All Rights Reserved
  32. 32. Good to great Key findings •  “Sustained great results depend upon building a culture full of self disciplined people who take disciplined action” •  “A culture of discipline is not just about action. It is about getting disciplined people who engage in disciplined thought and then who take disciplined action.” © Triangle Pest Control LLC. All Rights Reserved
  33. 33. Good to great This makes sense •  How many successful, undisciplined business owners do you know (that have been in business >10yrs)? •  Disciplined people will debate and find the right strategies •  Discipline is the bedrock upon which strategy is built © Triangle Pest Control LLC. All Rights Reserved
  34. 34. Principle #3: A disciplined culture produces high productivity Profit High productivity Disciplined culture © Triangle Pest Control LLC. All Rights Reserved
  35. 35. Part II How we developed our culture and productivity to support a high profit company © Triangle Pest Control LLC. All Rights Reserved
  36. 36. How we created a disciplined culture Profit Theory Execution High productivity Disciplined culture © Triangle Pest Control LLC. All Rights Reserved
  37. 37. My typical day I have ideas - I get them •  The morning run •  The morning shower •  On the way to work •  When I read an article •  While I am reviewing a operational reports Patience is not a virtue that I was blessed with © Triangle Pest Control LLC. All Rights Reserved
  38. 38. How we created a disciplined culture What did this behavior create? •  Staff that never fully executed anything •  Lots of activity but little work •  A constant place of shifting priorities •  We suffered from “CADD”…. And I was the cause © Triangle Pest Control LLC. All Rights Reserved
  39. 39. How we created a disciplined culture It all starts at the top As a leader, I had to develop management discipline •  Decide what was really priority •  Stay the course, even though it was killing me •  Learn how to say no when I really wanted to say yes •  Realize that I had to involve others in decisions •  Create “stop doing” lists © Triangle Pest Control LLC. All Rights Reserved
  40. 40. How we created a disciplined culture Change #1: I had to be disciplined myself in how I managed the company and how I engaged my managers © Triangle Pest Control LLC. All Rights Reserved
  41. 41. How we created a disciplined culture Have you ever taken the time to get very clear on what type of people and culture you want at your company? Can anyone in your company recite what’s in it? © Triangle Pest Control LLC. All Rights Reserved
  42. 42. How we created a disciplined culture I am sure that you know where you want the business to go and how to get there. You know what type of people you want to be there The problem: As you grow staff, it becomes very difficult to communicate that vision with absolute clarity © Triangle Pest Control LLC. All Rights Reserved
  43. 43. How we created a disciplined culture Strategic Objective •  A document that details •  What kind of company you want to be •  Your values •  Your culture •  Your customers •  What you do and more importantly, what you don’t This is not a mission statement or a platitude of values(though it contains both) to be put on a wall © Triangle Pest Control LLC. All Rights Reserved
  44. 44. How we created a disciplined culture Change II: We created a “real” Strategic Objective •  Clarity on where you are going as a company •  Every employee is tested on it •  Every company meeting I talk about it •  When people start rolling their eyes, I know that I am talking about it just about enough © Triangle Pest Control LLC. All Rights Reserved
  45. 45. Riddle What cost us 4k in three weeks (with $0 return on capital) and only increases exponentially each and everyday that it exists? © Triangle Pest Control LLC. All Rights Reserved
  46. 46. How we created a disciplined culture A BAD HIRE •  •  •  •  It will happen to everyone Approach recruiting much like you do marketing What is the demographic? (age, likes, dislikes, etc) Market relentlessly to that person © Triangle Pest Control LLC. All Rights Reserved
  47. 47. How we created a disciplined culture Disciplining people Disciplined people Step 1: Creating a disciplined culture starts with staffing with disciplined people © Triangle Pest Control LLC. All Rights Reserved
  48. 48. How we created a disciplined culture How do we hire disciplined people? •  The following is required for consideration •  Usually have hobbies outside of work that require discipline (sports, intellectual) •  Usually is already employed •  No prior experience in our industry •  I hate “the way we did at “_______” •  Ownership •  Demonstrated ownership in something © Triangle Pest Control LLC. All Rights Reserved
  49. 49. How we created a disciplined culture What is the point? Make hiring the disciplined people priority #1 -- Hint: It is! •  We select based on our culture (from Strat Obj) •  We use personality profiles •  We use scorecards (that line up with our culture) •  Probing questions that dig (and then dig more) © Triangle Pest Control LLC. All Rights Reserved
  50. 50. Jim Collins, How the mighty fall How companies move from great to irrelevant Same approach as Good to Great (researched declining companies with comparisons) Key marker of a company on the decline: “There is a declining proportion of the right people in key seats, because of losing the right people and/or growing beyond the organization’s ability to get enough people to execute on that growth with excellence” – Jim Collins © Triangle Pest Control LLC. All Rights Reserved
  51. 51. How we created a disciplined culture Change III: We completely revamped our hiring systems to produce disciplined people •  Clarity on who those people are (Strategic Obj) •  Systems to attract those people •  Systems to filter the wrong people (Scorecards) This is not something you want to delegate. Remember Jack Welch and 80%? © Triangle Pest Control LLC. All Rights Reserved
  52. 52. How we created a disciplined culture Go through the process and you do the following: 1.  You create a strategic objective to get clear on the culture you want and what your business stands for 2.  You re-vamp your recruiting and hiring systems to produce disciplined people 3.  Now what? © Triangle Pest Control LLC. All Rights Reserved
  53. 53. How we created a disciplined culture During the tenure of a politician, what is the most productive time? © Triangle Pest Control LLC. All Rights Reserved
  54. 54. How we created a disciplined culture 90- Day Objectives •  All positions at Triangle Pest Control have them •  Talk about a 1st impression of how we do things •  Clear document that details •  A clear path to success in the first 90 days •  Clear communication of what is expected •  Clear communication of performance expectations •  Clear communications for where the lines of responsibility lie (training, performance, etc…) © Triangle Pest Control LLC. All Rights Reserved
  55. 55. How we created a disciplined culture Change IV: We got very deliberate about the onboarding process of each team member This Not This © Triangle Pest Control LLC. All Rights Reserved
  56. 56. How we created a disciplined culture Summary 1.  Start with yourself as a leader 2.  Develop a “real” Strategic Objective 3.  Build a targeted recruiting and hiring system that attracts disciplined people 4.  Manage the on-boarding process to clearly communicate and set expectations © Triangle Pest Control LLC. All Rights Reserved
  57. 57. How we improve and manage productivity Profit High productivity Disciplined culture © Triangle Pest Control LLC. All Rights Reserved
  58. 58. How we improve and manage productivity Would you like to watch or play the following game? •  None of the players know the score •  Feedback is given at the end of the game •  No clear out of bounds, no clear score lines •  Rules are pretty much made as you go along © Triangle Pest Control LLC. All Rights Reserved
  59. 59. How we improve and manage productivity Total transparency & frequent feedback •  Don’t be afraid to tell people where you are out •  My experience is that oftentimes employee views of their performance are over inflated •  It is easy to be “real” when everyone knows what is going on “Meatin” our goals (idea from Harden Blackwell) © Triangle Pest Control LLC. All Rights Reserved
  60. 60. How we improve and manage productivity Change #1: We completely opened our books to let everyone on the team know what the score is •  You can use ratios •  No one needs to know your salary •  If you cannot measure it, you cannot manage it •  You will get more people who play the “game” vs. just playing for themselves © Triangle Pest Control LLC. All Rights Reserved
  61. 61. How we created a disciplined culture If you want have high performance team, everyone must always be getting better (otherwise they are getting worse) •  Being in a car traveling uphill with no brakes. The only choices are moving forward or backwards. There is no holding steady. © Triangle Pest Control LLC. All Rights Reserved
  62. 62. How we created a high-profit company Profit High productivity Disciplined culture © Triangle Pest Control LLC. All Rights Reserved
  63. 63. Parting thoughts “Everything in our strategy our competitors could copy tomorrow … but they can't copy the culture – and they know it.” Herb Kelleher, Founder, Southwest What is the point? •  You have to build the proper foundation before you can expect to see the results © Triangle Pest Control LLC. All Rights Reserved
  64. 64. Triangle Pest Control Business Framework Profit Culture of execution Disciplined people © Triangle Pest Control LLC. All Rights Reserved
  65. 65. Resources to help you get started Managers •  Good to great, Jim Collins •  E-Myth, Michael Gerber •  Entreleadership, Dave Ramsey •  How the mighty fall, Jim Collins •  Who: Hiring “A” players, Geoff Smart & Randy Street All Staff •  Making yourself indispensible, Mark Samuel •  Super Service,Val & Jeff Gee © Triangle Pest Control LLC. All Rights Reserved
  66. 66. Questions? Donnie Shelton Raleigh, NC donnie.shelton@trianglepest.com @donnieray3

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